China urges halt to car industry's bruising price wars

China called on Saturday for its automotive industry to halt brutal price wars, as a threat to the sector's health and sustainable development, after key executives jousted over pricing pressure after large discounts offered to buyers.

Tension between some top players in the world's largest car market has spilt into the open as competition intensifies, with price wars initiated in early 2023 showing little sign of abating despite concern among government and industry.

The industry ministry vowed to step up efforts to correct what it called excessive competition, the official news agency Xinhua said on Saturday.

“There are no winners in a 'price war', let alone a future,” the agency cited an unidentified ministry official as saying.

The comments came after fresh incentives offered last week on more than 20 models by electric vehicle giant BYD, that prompted several rivals, such as Geely and Chery, to follow suit.

The ministry's comments echo a similar call, also on Saturday, by the China Association of Auto Manufacturers for a truce in the price wars, saying they affect profitability and efficiency.

It added that a new round of price war “panic” was touched off in China after substantial discounts offered on May 23 by a carmaker it did not identify. It proposed remedies such as car companies sticking to the principle of fair competition and larger players refraining from market monopolies.

“Apart from reducing the price of goods according to law, enterprises shall not dump goods at prices below cost,” it added.

BYD's incentives, which include government trade-in subsidies, can cut the domestic cost of its BYD Seagull electric hatchback to 55,800 yuan (R138,660).

On Friday, a BYD executive had decried as alarmist comments by the chief of Great Wall Motor that the industry was “unhealthy”.

Great Wall's Wei Jianjun said pricing pressure was hammering the bottom lines of car companies and suppliers.